Saturday, August 22, 2026

Removing Zeros: A Currency Restructuring Or A Step To Boost Confidence In The Dinar?

🏛️💵 Removing Zeros: A Currency Restructuring Or A Step To Boost Confidence In The Dinar?

📍 Baghdad | ✍️ Anwar Ayed

The issue of removing zeros from the Iraqi currency has resurfaced, sparking renewed economic debate over the feasibility of this move and its potential impact on the value of the Iraqi dinar, citizens' purchasing power, and the readiness of Iraq's banking and financial sectors to implement such a reform.

Economic experts believe that, if carried out under a comprehensive study and a well-planned strategy, removing the zeros could help restructure the currency and simplify financial and banking transactions. However, they stress that the measure alone does not increase or decrease the purchasing power of the dinar, provided that prices, salaries, and savings are adjusted proportionally.

💰 Strengthening The Value Of The Dinar

Economic expert Haider Al-Sheikh told Al-Sabah newspaper:

"Changing the Iraqi currency and removing zeros will enhance the value of the Iraqi dinar against foreign currencies," explaining that "changing the currency will contribute to reviving the economy and providing cash liquidity to the government."

He explained that the currency replacement process would require several months to print the new denominations before replacing the existing notes. According to Al-Sheikh, the process could strengthen the balances of both government and private banks while improving liquidity throughout the financial system.

🏦 The Necessary Cash

Al-Sheikh added that another important benefit would be determining the actual amount of currency held by the government and banking sector, as well as identifying how much cash is circulating throughout the Iraqi market.

He noted that since 2003, Iraq has printed more than 100 trillion dinars, estimating that nearly 70% of the currency remains outside government control and is being stored in homes or circulating in the market.

🔄 Renaming The Monetary Unit

Economist Mustafa Faraj stated that removing zeros from the Iraqi currency, if implemented according to a comprehensive study and strategic plan, would represent a positive step toward restructuring the currency and simplifying banking and financial transactions.

He emphasized that the process itself does not automatically increase or decrease the purchasing power of the dinar.

💵 The Purchasing Power Of The Dinar

Faraj explained that removing three zeros means that prices, salaries, and bank balances would all be adjusted proportionally. Therefore, the purchasing power of Iraqi citizens would remain unchanged simply because of the redenomination.

He added that the principal economic benefits include:

✅ Reducing the size of numerical figures in financial transactions.
✅ Simplifying accounting and banking operations.
✅ Supporting electronic payment systems.
✅ Making transactions in Iraqi dinars more efficient and transparent.

He stressed that the success of the reform depends on monetary stability, price control, and broad public awareness.

According to Faraj, removing the zeros should be viewed as part of a broader monetary and banking reform package designed to strengthen confidence in the Iraqi dinar and support long-term economic stability—not as a standalone measure.

⚠️ Risks Of The Conversion Phase

Economic researcher Ahmed Eid warned that the greatest risks are not associated with removing the zeros themselves, but with the transition period.

He cautioned that confusion in the markets and the possibility of some merchants rounding prices upward could create the perception of higher living costs.

He also pointed to additional concerns, including:

📌 Limited financial literacy among some citizens.
📌 Confusion when converting savings, contracts, and debts.
📌 Rumors and speculation regarding the value of the dinar.

According to Eid, these risks become even greater if the reform is introduced during a period of financial pressure and weak public confidence.

🛡️ Dual Pricing And Oversight

To protect citizens' purchasing power, Eid recommended implementing a transitional period in which both the old and new dinars circulate simultaneously.

He also called for:

✅ Dual pricing during the transition.
✅ Strict controls to prevent unfair price rounding.
✅ Strong market oversight.
✅ A nationwide public awareness campaign.

Eid emphasized that the Central Bank must ensure that bank accounts, savings, salaries, debts, and contracts are converted proportionally, while making the new currency available in an orderly manner.

He concluded that:

"The most important thing is that the removal of zeros should be preceded by real financial and monetary stability," explaining that protecting purchasing power depends on controlling inflation, stabilizing the exchange rate, and addressing broader financial and economic imbalances.

🔗 Source:

https://iqdnews.substack.com/p/removing-zeros-a-currency-restructuring